A strong risk-off sentiment has prevailed since last week, driving investors to safer assets and dampening the appeal of cryptocurrencies. Stock markets crashed on Monday, with global stocks suffering their worst day since 2020, led by tech stocks, and continued falling this week. Most major cryptocurrencies also plummeted this week, as crypto markets have been following the overall trends of stock markets and especially of tech stocks.
On Wednesday, US CPI and Core CPI data exceeded expectations, showing that US inflation is not slowing down as much as forecasted. US consumer prices rose at an annual pace of 8.3% in March according to Wednesday’s data, boosting the dollar even further.
The dollar reached a 20-year high this week, buoyed by hawkish Fed policy and risk-off sentiment. The rising dollar diminishes the appeal of high-risk assets such as cryptocurrencies. Continued Russian hostilities against Ukraine are also increasing risk-aversion sentiment, putting pressure on crypto markets.
Last week, the Fed raised its benchmark interest rate by 50 base points, its highest rate hike in 22 years and the BOE also increased its interest rate by 25 bp. The shift of major central banks towards a more hawkish fiscal policy has been putting pressure on cryptocurrencies over the past few months. Most major Central Banks are turning towards a tighter policy and a return to pre-pandemic interest rates, driving cryptocurrency prices down.
Bitcoin fell below the $30,000 level support on Wednesday, plummeting below the $28,000 level. If Bitcoin price declines further, support may be found near $19,400, while resistance may be found at $40,000 and further up near $48,200.
Ethereum also crashed this week, trading below the $2,440 support on Wednesday and touching the $2,000 key level. If the Ethereum price continues to decline further support may be found near $1,700, while resistance may be encountered near $3,174.
BTC/USD 1h Chart
ETH/USD 1h Chart
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